Many offices in the United States remain empty as the Omicron variant of Covid-19 has delayed the return to power of most companies. In contrast, according to reports from CNBC, ABC News and NPR, there is a shortage of warehouses in the country. Commercial Real Estate Services JLL said that as of November of this year, nearly 96% of industrial space in the United States was already occupied. The ideal available warehouse capacity for supply chain efficiency across the country is 15%.
In 2020, nearly 190 million square feet of warehouses were built, and over 43% of these were pre-let even before construction was completed. According to commercial real estate company CBRE, more than a billion square feet of warehouse space has already been used in 2021, but there is still roughly 300 million square feet missing. The pre-rental for 2022 is also already sold out. By 2025, the country will need an additional 1 billion square feet of new warehouse space to meet demand.
Effects of electronic commerce
The need for more warehouses results from the rise of e-commerce during the pandemic. People are using online shopping to relieve stress and anxiety caused by the health crisis. They are buying goods online more than they have ever done before. The estimate is that the growth in e-commerce since the arrival of Covid-19 is equivalent to five years of compressed average growth.
Warehouses need up to three times the space of brick and mortar stores. As people buy more products online, e-commerce retailers are also importing more products faster. Online sellers need to have merchandise on hand for prompt delivery to customers. While most warehouses before the pandemic were in areas far from urban and suburban residential areas, online retailers are now looking for warehousing options closer to their customers. This makes the delivery faster.
There is strong competition among online sellers, and the immediate availability and delivery of products ensures customer loyalty. Consumers now expect their orders to arrive quickly. Some e-merchants even promise same-day delivery to stay ahead of the competition.
E-commerce retailers are also sourcing products to protect themselves from supply chain issues. These are common during the pandemic, as factories often close due to a Covid-19 outbreak. There are also frequent disruptions in ports and in trucking services. The labor shortage contributes to the load in the warehouses. There are not enough workers and truckers to empty warehouses more efficiently.
Due to the limited availability of warehouses, rents also increased in 2021. Warehouse builders can earn more by building more warehouses at a faster rate. However, they also face supply chain challenges for building materials such as trusses for cement roofs and pins to hold the roof and walls together. There is also a shortage of construction workers.
Warehouses today are very different from those of the past as they are now more sophisticated with lots of smart automated features. For example, forklifts are now automatic and use fork protection sleeves to prevent damage such as punctures, marks and scratches on the products being handled. There are automated storage retrieval systems (AS / RS), robots and cobots.
AS / RS uses different user-defined levels of automation to handle, store and retrieve goods with speed and precision. This includes transporting goods through the warehouse, placing the goods on shelves or shelves, and getting the products correctly identified on the shelves or shelves. The AS / RS can carry loads that one person cannot carry, move faster without fatigue, and reach higher shelves. Vertical storage space can therefore be maximized. The downside is that using AS / RS requires a major modernization of existing warehouses to install the infrastructure required by the system.
Warehouse robots are either Automated Guided Vehicles (AGVs) or Automated Mobile Robots (AMRs) that can be used in existing warehouses without retrofitting. AGVs can work as conveyors, carts, towing machines, or forklifts, which means they can sort, pick, and move products. Some types even have the ability to put products together.
According to Businesswire, by 2026, a combination of the two types of robots will account for 18% of warehouse automation. The expected combined market for AGVs and AMRs will reach $ 13.2 billion that year. AMRs will be more widely used, gaining a 45% market share.
Cobots are robots designed to safely collaborate with humans in performing tasks. Studies show that this increases productivity by up to 85 percent, compared to each working alone. Some cobots are portable, allowing workers to perform at a higher level.
Automated warehouses benefit workers as they are spared dangerous tasks and monotonous and repetitive tasks. Workers are still needed for tasks that require human analysis and decision-making, increasing the use of brain over muscle. The successful collaboration between humans and machines will benefit the community. However, the problem that has yet to be solved is to build all these much needed warehouses.